In the waning days of the Obama administration, there are finally indications that some long-elusive, tangible effects of the economic recovery are starting to be felt by workers.
The latest update on U.S. labor force productivity, released Tuesday, showed that unit labor cost — a productivity-based measure of what it costs companies to pay workers — jumped by roughly 3 percent during the second and third quarters of 2016. (Those are the most recent quarters of available data.)
The pop in unit costs is another sign that workers are starting to gain their footing in the never-ending tug-of-war with companies. Monthly readings on U.S. hourly earnings have shown a clear upward trend over the last two years. In fact, real U.S. median household incomes — a gauge of what a typical household earns — jumped by 5.2 percent in 2015, the largest annual increase on record.
Over the short term, this is good news for the U.S. economy. Wage growth means shoppers can afford to buy stuff — without going into debt. That’s not exactly a minor point in an economy where consumer spending makes up about two-thirds of all activity.
But the recent increase in wages hasn’t done much to reverse the decades-long rise in inequality in the U.S. It will take years of consistent improvements for workers to repair the damage done by that trend.